Finding Text
FINDING 2022-001: Audit Adjustments Material Weakness Criteria ? The Organization?s management has the responsibility to record, process, and summarize the accounting data to ensure that uses of the data have complete and accurate accounting records. Nonprofit organizations are also required to prepare financial statements in accordance with generally accepted accounting principles (GAAP). Condition ? A correction was made to the financial statements to record a donated bank building and land of $4,150,000. Context - Management is responsible for the recording, processing, summarizing, and review of the accounting data (i.e. maintaining books and records) and for making the necessary adjustments to those books and records before the audit and preparation of the financial statements. Cause ? The organization does not normally receive noncash contributions and does not have an established history of recording such transactions. In addition, the organization experienced a change in its Controller position. The combination of the transition and the new or out of the ordinary transactions contributed to them not being recorded properly. Effect - Members of management and the Board of Directors using the Organization?s internal books and records did not have complete and accurate information. Recommendation - We recommend the Organization establish procedures to regularly new or out of the ordinary activities to ensure its accounting is complete and accurate. Auditee's comments and response - During 2022, PPL experienced turnover in its Corporate Controller position. Transfer of knowledge regarding the acceptance of the donated property and communication regarding the timing of its recording were not properly executed during the transition. Additionally, the nature of the contribution (noncash/property) is unique to our organization and the omission of its recording was not identified within the established internal controls for cash transactions. As such, recording of the donated property was inadvertently overlooked. The Organization is instituting a correction plan that includes updating financial policies regarding treatment of non-cash donations of property and formalizing a mid-year check-in with our external auditors to reflect on takeaways from the previous audit, provide updates on the current year, and begin preliminary preparations for the upcoming audit process. Responsible party for corrective action: Scott Cordes ? Chief Financial Officer & Senior Vice President of Operations